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Learn option chain analysis of Nifty 50

Buying and selling options is risky and traders need tools to ind the probability of success. This blog will help you to calculate the probability of making money in an option trade with this free excel sheet.

Many technique are there but the simplest is based upon understanding the math behind it.

Procedure:

  1. Visit Nse India website https://www.nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp?symbolCode=-10006&symbol=NIFTY&symbol=NIFTY&instrument=-&date=-&segmentLink=17&symbolCount=2&segmentLink=17
  2. There are three term used in option chain analysis
  3. Call , Put and Strike Price
  4. Trader who purchase the call options thinks nifty 50 price will increase.
  5. Trader who purchase the put options thinks nifty 50 price will decrease.
  6. There are 3 different options to purchase call and put options.
  7. In the Money
  8. Out of money
  9. At the Money

In the Money call and put options

  1. When the strike price of call option is less than nifty 50 price that strike price is in the money.
  2. When the strike price of put option is more than nifty 50 price that strike price is in the money.

Out of Money call and put options

  1. When the strike price of call option is more than nifty 50 price that strike price is out of money.
  2. When the strike price of put option is less than nifty 50 price that strike price is out of money.

At the Money call and put options

  1. When the strike price of call option is equal than nifty 50 price that strike price is at of money.
  2. When the strike price of put option is equal than nifty 50 price that strike price is at of money.
  • How to find Support and resistance using option chain ?
  • Check highest open interest call side it is resistance
  • Check highest open interest put side it is support
  • How to identify nifty direction ?
  • Record highest open interest data daily
  • Check the changes in open interest
  • If highest open interest on put side increase and call side decrease Market will move up
  • If highest open interest on call side increase and put side decrease Market will move up
  • How to find Support and resistance using option chain ?
  • Check highest open interest call side it is resistance
  • Check highest open interest put side it is support

Standard Rules of Option chain analysis:

  • How to analyze Short and Long position build up using option chain?
  • There are 4 possible cases for this analysis
  • Case 1
  • Call side option price increase and open interest increase
  • Put side option price decrease and open interest increase
  • If these both condition fulfill then market will move up.
  • Case 2
  • Call side option price decrease and open interest increase
  • Put side option price increase and open interest increase
  • If these both condition fulfill then market will move Down
  • Case 3
  • Call side option price increase and open interest decrease.
  • Put side option price decrease and open interest Increase
  • If these both condition fulfill then market will move Down
  • Case 4
  • Call side option price decrease and open interest decrease.
  • Put side option price decrease and open interest decrease
  • If these both condition fulfill then market will remain sideways.
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Thursday, 27 June 2019

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